updated 03:10 pm EDT, Mon July 16, 2007
Vodafone denies takeover
Worldwide phone carrier Vodafone is denying a Financial Times report that suggests it will buy out the American carrier Verizon. The Times had earlier reported that Vodafone was considering a $160 billion bid for Verizon, which if completed would be one of the largest acquisitions ever recorded. This was considered as an alternative to a put option for its Verizon stake, which could still allow Vodafone to extract as much as $20 billion out of Verizon for Vodafone shareholders.
The Associated Press writes that the shareholders have become increasingly vocal about more profit from Vodafone, which owns 45 percent of Verizon. The solution suggested by the Times could then see Verizon's wireline business sold to equity buyers for $90 billion, which would in turn be the largest leveraged buyout in history.
"Vodafone wishes to make it clear that it has no plans to make such an [acquisition] offer," a statement says.
Even if Vodafone initiated a takeover, UBS analyst John Hodulik notes that US agencies would probably block the maneuver, not the least because Verizon provides many government services. Congress is also becoming inreasingly skeptical when it comes to equity buyouts.
Vodafone would face technical hurdles if it attempted to actually run Verizon's cellular business -- while Vodafone is a GSM carrier, Verizon is CDMA, meaning that phones in North America would not be able to connect to the same company's networks in other continents, unless Vodafone embarked on an expensive conversion campaign.